What is the Healthcare Supply Chain?

Supply chains have been a hot topic since the start of the COVID-19 pandemic – everything from the production of toilet paper to the healthcare supply chain. 

Most Americans are unaware of the various aspects of the healthcare supply chain that allow patients to maintain their health and obtain vital treatments. From the manufacturer to the pharmacy, medicines and other healthcare products make many stops before reaching one of the 6,090 hospitals or over 67,000 pharmacies in the United States. The sheer number of medicines and products moved by the supply chain adds to this complexity. According to the IQVIA Institute for Human Data Science’s April 2018 report “Medicine Use and Spending in the U.S.”, over 5.8 billion prescriptions were filled in 2017 in the United States alone. Innovations and partnerships at every stop of the supply chain help guarantee that medicines are moved to the places where patients most need them.

But what do we mean when we say the healthcare supply chain? The healthcare supply chain is an extensive network of systems, components, and processes that collectively work to ensure medicines and other healthcare supplies are manufactured, distributed, and provided to patients. This complex global system is established with ample built-in protections to ensure that medications and other medical supplies are manufactured and delivered in a timely fashion – even through pandemics or natural disasters. The most vital of these protections is the supply chain’s ability to predict, plan, and react to potential disruptions in one or more links of the chain through a diverse pre-established global network.

There are many players in the healthcare supply chain, such as pharmacies and pharmacists across all practice settings, health systems and hospitals, pharmaceutical quality standard developers, and health insurance providers – but manufacturers and distributors are key to the healthcare supply chain. Manufacturers are the first link in the supply chain and make the medicines and healthcare supplies we depend on. Manufacturers manage the distribution of their product from the point of production to wholesalers and in some instances, directly to a pharmacy or hospital. Distributors are the second link in the healthcare supply chain. Distributors purchase drugs and medical products in bulk from manufacturers, and meticulously maintain large stocks in strategic locations across the country. Some wholesalers specialize in dealing with a particular range of products, such as biologics or to specific types of customers, such as nursing care facilities.

Healthcare supply chains take a great deal of time and effort to construct – many beginning years before a medical product is even approved for patient use. For example, developing a supply chain for medicine includes everything from contracting with various suppliers, to ensuring the availability of a manufacturer’s highly skilled labor force , to maintaining the critical quality control and testing systems needed to protect patients.

Over decades, the healthcare supply chain has painstakingly assembled substantial global networks to ensure that if one area or link of the chain is compromised, another can fill the gap. Additionally, the supply chain network is constantly investing in the design and ongoing maintenance and modernization of the system itself. These efforts ensure we’re successful in avoiding major disruptions to medical delivery no matter the current environment. Read more about how manufacturers and distributors anticipate and respond to a crisis.

 

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